Sweeney v Australian Securities and Investments Commission

[2006] NSWSC 103

CITATION:	Sweeney v Australian Securities and Investments Commission [2006] NSWSC 103
HEARING DATE(S):	28/02/2006
JUDGMENT DATE :	2 March 2006
JUDGMENT OF:	Hoeben J at 1
DECISION:	See paragraph 34
CATCHWORDS:	Subpoena to give evidence - application to set it aside - proposed evidence irrelevant - impermissible purpose for issue of subpoena - proposed evidence inadmissible under s208L Legal Profession Act, 1987.
LEGISLATION CITED:	Corporations Act 2001 Legal Profession Act 1987 Uniform Civil Procedure Rules 1999
CASES CITED:	Botany Bay Instrumentation and Control v Stewart (1984) 3 NSWLR 98 Hatton v Attorney-General of the Commonwealth of Australia & Ors (2000) 158 FLR 31 Larsen v Vile [1999] NSWCA 397 Portal Software v Bodsworth [2005] NSWSC 1115 Trade Practices Commissioner v Arnotts Limited (1989) 21 FCR 306
PARTIES:	Charles Augustine Sweeney - Plaintiff Australian Securities and Investments Commission - Defendant
FILE NUMBER(S):	SC 10792/2005
COUNSEL:	Mr L Kelly - Plaintiff Mr D Stack - Defendant
SOLICITORS:	Noel F Bracks & Company - Plaintiff Gillian Tang - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HOEBEN J

Thursday, 2 March 2006

10792/2005 – Charles Augustine SWEENEY v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

JUDGMENT

1 HIS HONOUR:

Nature of proceedings
The application before me is by the defendant to set aside two subpoenas directed to Peter Riordan and Jan Redfern to attend for the purpose of giving evidence in these proceedings (the principal proceedings), which have been fixed for hearing on 7 March 2006. Ms Redfern and Mr Riordan are senior lawyers in the employ of the defendant. The subpoenas are dated 13 February 2006.

Background

2 By an amended statement of claim, filed on 25 February 2000 in proceedings no. 3339 of 1999 in the Equity Division of this Court, the defendant sought declarations that the plaintiff had contravened sections 1002G(2), 998(1) and 995(2) of the Corporations Act and sought an order pursuant to s230 of the Corporations Act that the plaintiff be prohibited from managing a corporation for such period as the Court considered appropriate. Injunctions restraining the plaintiff from contravening sections 1002G, 998(1) and 995(2) of the Corporations Act were also sought.

3 Those proceedings in the Equity division were resolved. The Court made orders and noted the agreement between the parties as follows:

“The Court notes:
The undertaking given to the Court by the defendant (by his counsel) (with a denial of wrongdoing or unlawful conduct) that, until further order, he will not manage a corporation without the consent of the plaintiff or the approval of the Court.
The Court orders that:
The proceedings be dismissed.
The Court further notes:
The agreement between the parties that all existing costs orders shall remain on foot and be paid as assessed or agreed but that, otherwise, there be no order as to the costs of the proceedings.”

(Reference to the defendant is a reference to Charles Augustine Sweeney.)

4 The parties did not reach agreement in respect of the costs. The defendant lodged an application with the Court for the assessment of the costs on 27 August 2004. The Court assigned Mr Graham Ellis as the Costs Assessor. Mr Ellis delivered his assessment on 7 and 13 February 2005. The costs to which the defendant was entitled from the plaintiff were assessed by Mr Ellis at $97,020.94.

5 On 7 March 2005 the plaintiff commenced the principal proceedings by way of summons in effect appealing from the decision of the Assessor. The following declarations and orders are sought:

“Declarations that:

(1) The rejection by the assessor of the submissions recorded in paragraph 19 of his reasons was wrong in law;

(2) The rejection by the assessor of the submission recorded in paragraph 20 of his reasons was wrong in law;

(3) The assessor should not have allowed the claim for GST (paragraph 30);

(4) The assessor should not have ordered both parties to pay half the costs (paragraph 31) or the filing fee (paragraph 33) in the light of the failure of the bill on taxation to sustain even 50% of its claim.

(5) The assessor should not have allowed the figure referred to in paragraph 25, as the person claimed to be a para-legal had not been engaged or paid by the legal practitioner but was an employee of a party whose actual salary did not equate to the amount allowed.

(6) An order pursuant to the Legal Profession Act s208L that the Court’s decision be remitted to the assessor to determine in accordance with the Court’s judgment upon these two questions.”

(Notwithstanding the words of para 6 of the Summons, it would seem that five not two questions are raised.)

6 So far as is relevant to the application before me, para 19 of the assessor’s reasons was:

“19. On behalf of the Respondent it was also submitted that the costs of three of the Applicant’s officers, namely Mr Riordan, Ms Redfern and Mr Howard, are not allowable because each of these persons was the subject of allegations that they had acted improperly and unlawfully during the investigation underlying the subject proceedings. Those matters never arose above the status of allegations. As the substantive proceedings were settled, those allegations were never heard or determined. I do not accept that I should undertake any consideration of such allegations: My role is the quantification of existing costs orders by reference to such considerations as to whether work was reasonably required and what is a reasonable amount to allow in respect of such work. I note that in the documents available to me there is nothing to suggest that this matter was raised with the Court prior to the subject costs orders being made.”

7 The evidence upon which the plaintiff relies in the principal proceedings is an affidavit of Lincoln Francis Kelly, solicitor, sworn 29 June 2005. That affidavit refers to volumes 1-3 prepared for and filed in Court of Appeal No CA40502 of 2001. The other material to which the affidavit refers is the bill of costs, the submissions made to the costs assessor and the assessor’s reasons. The defendant has indicated in correspondence that it will object to most of the Court of Appeal material since it asserts that material comprises untested affidavits and is irrelevant to the matters raised in the summons. I have not seen the Court of Appeal documents.

8 The submissions upon which the parties rely in the principal proceedings were placed before me.

9 In the course of argument I pointed out to the parties that it may be preferable for this matter to be dealt with by the trial judge as a preliminary issue. The strong likelihood was that any decision of mine would be appealed from so that the date which had been allocated for the hearing of the principal proceedings would be lost. Despite that risk, the defendant wished me to rule upon its application.

Submissions

10 The defendant submitted that given the nature of the principal proceedings, ie an appeal pursuant to s208L of the Legal Profession Act 1987, evidence from Mr Riordan or Ms Redfern could not be relevant to any matter to be considered by the Court. The role of a costs assessor was set out in s208F of the Act. It did not include going behind a costs order, but was restricted to a consideration of whether or not it was reasonable to carry out the work to which the costs related and what was a fair and reasonable amount of costs for the work concerned.

11 What the plaintiff was seeking to do, so it was submitted, was to engage in a fishing expedition directed at challenging the costs order. As such the subpoenas constituted an abuse of process.

12 The defendant also relied upon the provisions of s208L which restricted any appeal to a point of law and prevented evidence being adduced which was not before the costs assessor. Reliance was placed upon Larsen v Vile [1999] NSWCA 397.

13 On behalf of the plaintiff it was submitted that one of the issues to be decided in the principal proceedings was whether the costs assessor should have allowed any costs in relation to work performed by Mr Riordan or Ms Redfern. The written submission then continued:

”The plaintiff contends that Mr Riordan had a conflict of interest in that he had sent an email urging that ASIC commence proceedings against the plaintiff before the plaintiff had an opportunity to bring his complaint about Mr Riordan’s own conduct during the investigation. The plaintiff contends that the costs assessor was required by law to take into account whether Mr Riordan should not have been acting as a solicitor in the matter.
The plaintiff contends that Ms Redfern was one of the persons in ASIC who held and exercised delegated authority to decide on ASIC’s behalf to bring the proceedings against the plaintiff. The plaintiff says Ms Redfern had an apparent personal motive for injuring the plaintiff in that her conduct as a solicitor had some years previously been the subject of adverse comment by him as counsel in the proceedings between Westpac and Halabi in which they had acted for opposing parties.”

14 The following submission was also made on behalf of the plaintiff:

“The plaintiff’s appeal includes an application for leave to review the cost assessor’s decision upon factual grounds and hence the subpoenas will also be relevant to that application. On the appeal on points of law, the plaintiff contends that the judge should hear the evidence of Mr Riordan and Ms Redfern as this evidence will be led on any reconsideration and if it shows that a reconsideration is necessary, it is relevant for the judge to take into account. The decision relied upon by ASIC, Larsen v Vile , does not appear to address this circumstance and the plaintiff will submit to the judge at the hearing that it should not be followed on this application.”

15 I have to say that I do not read the plaintiff’s summons in the principal proceedings as including an application for leave to review the costs assessor’s decision upon factual grounds. As I read the summons, it is restricted to points of law as required by s208L of the Legal Profession Act 1987.

Decision

16 It was common ground between the parties that this Court has power to set aside the subpoenas in accordance with r 33.4(1) of the Uniform Civil Procedure Rules and the Court’s inherent jurisdiction (Botany Bay Instrumentation and Control v Stewart (1984) 3 NSWLR 98).

17 When reviewing the sorts of cases where a subpoena can be set aside, Powell J in that case referred to the following categories:

“(3) Where the subpoena had not been issued bona fide for the purpose of obtaining relevant evidence and the witness to whom the subpoena had been addressed was unable to give relevant evidence.
…

(7) Where the subpoena has been used for a purpose which is impermissible as for example “fishing”.

18 His Honour also made it clear in that decision that the categories of case where the Court might set aside a subpoena were not closed. His Honour identified the following as the basis for the Court’s exercise of its power:

“It is difficult to avoid the conclusion that, in reality, the court’s jurisdiction to set aside a subpoena is but one aspect of the court’s jurisdiction to act to prevent an abuse of process and that the particular classes of case which I have recorded above are to be regarded as no more than examples of situations which the courts, in the past, have held, and, in the future, would hold, to be cases of an abuse of process.”

19 In Portal Software v Bodsworth [2005] NSWSC 1115 Brereton J ([19]-[21]) concluded that lack of relevance is a sufficient ground for setting aside a subpoena. His Honour referred to Trade Practices Commissioner v Arnotts Limited (1989) 21 FCR 306 and Hatton v Attorney-General of the Commonwealth of Australia & Ors (2000) 158 FLR 31 to support that conclusion. I agree with his Honour that absence of apparent relevance is a sufficient ground to set aside a subpoena.

20 As was candidly admitted by the plaintiff in his submissions, the purpose of the subpoena directed to Mr Riordan is to adduce an admission that he had a conflict of interest when acting on behalf of the defendant in the Equity proceedings. The purpose of the subpoena directed to Ms Redfern is to adduce from her an admission that she was ill disposed towards the plaintiff and abused her position in the defendant’s organisation to do him harm.

21 Such evidence may have been relevant in the Equity proceedings. Those proceedings never went to a final hearing and were resolved on the basis set out in [5] hereof. That resolution included existing costs orders. When agreement could not be reached, it was necessary for those costs orders to be assessed.

22 The power of a court appointed costs assessor in performing his or her function is limited and regulated by s208F of the Legal Profession Act 1987:

“208F(1) When dealing with an application relating to costs payable as a result of an order made by a court or a tribunal, the costs assessor must consider:
(a) Whether or not it was reasonable to carry out the work to which the costs relate, and
(b) What is a fair and reasonable amount of costs for the work concerned.
(1A). An assessment must be made in accordance with the operation of the rules of the relevant court or tribunal that made the order for costs.
(2) A costs assessor is to determine the costs payable as a result of the order by assessing the amount of the costs that, in his or her opinion, is a fair and reasonable amount.
(3) If a court or a tribunal has ordered that costs are to be assessed on an indemnity basis, the costs assessor must assess the costs on that basis, having regard to any relevant rules of the court or tribunal.
(4) The costs assessed are to include the costs of the assessment (including the costs of the parties to the assessment, and the costs assessor). The costs assessor may determine by whom and to what extent the costs of the assessment are to paid.
(5) The costs of the costs assessor are to be paid to the Manager, Costs Assessment.”

23 It seems clear that s208F restricts the inquiry of the costs assessor to whether or not it was reasonable to carry out the work to which the costs relate, what is a fair and reasonable amount of costs for the work concerned and assessing the amount of the costs that in his or her opinion is a fair and reasonable amount.

24 Nowhere is the costs assessor authorised to go behind the costs orders. Nowhere, it seems to me, is the costs assessor authorised to conduct the sort of inquiry into the actions of employees of the defendant, evidence of which it is said the subpoenas are directed. The costs assessor, Mr Ellis, correctly directed himself in para 19 of his reasons.

25 If the costs assessor, whose assessment is under challenge on point of law in the principal proceedings, could not carry out such an inquiry, it is difficult to see how this Court when hearing the principal proceedings could do so, particularly given the limitations of s208L of the Act.

26 I am of the opinion that the evidence sought to be adduced from Mr Riordan and Ms Redfern, as described in the plaintiff’s submissions, is irrelevant to any issue to be considered in the principal proceedings.

27 Not only is that evidence irrelevant, but it seems to me that the evidence sought to be adduced from Mr Riordan and Ms Redfern must of necessity involve a “fishing” exercise. There is no evidence of any prior statement by either of the subpoenaed persons. The basis for the issuing of the subpoena seems to be what was described by the costs assessor as bare allegations. It is difficult to see how that situation would change as a result of evidence in chief being led from either Mr Riordan or Ms Redfern. Moreover the prospects of a successful application by the plaintiff under s38 of the Evidence Act would seem to be remote in the extreme.

28 Accordingly I would set aside both subpoenas on the basis that the evidence sought to be adduced is irrelevant to any matter in the principal proceedings and also on the basis that the subpoenas have been issued for a purpose which is impermissible, ie as a “fishing” exercise.

29 Despite the submission that the principal proceedings include an application for leave to review the cost assessor’s decision upon factual grounds, that is not how I read the summons. It seems to be restricted to an appeal under s208L of the Act. Section 208L provides:

“208(1) A party to an application who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the Supreme Court, appeal to the Court against the decision.
(2) After deciding the question the subject of the appeal, the Supreme Court may, unless it affirms the cost assessor’s decision:
(a) Makes such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or
(b) Remit its decision on the question to the costs assessor and order the costs assessor to redetermine the application.
(3) On a redetermination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given.”

30 In Larsen v Vile Priestley JA ([17]) said in relation to s208L:

“17 Subsection (3), read in association with the previous subsections, indicates that a s208L appeal is not only limited to being an appeal against a decision made by a costs assessor on a matter of law but also that in such an appeal no materials beyond (a) what was before the assessor and (b) the assessor’s reasons for decision, will be before the Supreme Court. By contrast, the appeal under s208M, if leave is given for it to be brought, is a new hearing in which the evidence need not be limited to that received at the original proceedings. …”

31 It is clear (reasons, para 19) that the proposed evidence from Mr Riordan and Ms Redfern was not before the costs assessor. Accordingly, even if such evidence were relevant, it is precluded by s208L from being considered in an appeal to the Supreme Court under that section. For that reason as well I propose to set aside the subpoenas.

Costs

32 The subpoenas were issued on 13 February 2006. By letter dated 17 February 2006 the defendant wrote to the plaintiff’s solicitors indicating that the subpoenas should not have been issued and seeking an undertaking by 4 pm on 21 February 2001 that the subpoenas would not be called upon. That undertaking was not given. This application was brought on 22 February 2006.

33 The matter proceeded before me as a full contest with each side making oral submissions and relying upon written submissions. The defendant has been successful in its motion. I see no reason why it should not have its costs of the motion.

34 Accordingly, the orders which I make are:

(1) The subpoena issued to Peter Riordan by the plaintiff on 13 February 2006, requiring his attendance at the hearing of the principal proceedings on 7 March 2006 is set aside.

(2) The subpoena issued to Jan Redfern by the plaintiff on 13 February 2006, requiring her attendance at the hearing of the principal proceedings on 7 March 2006 is set aside.

(3) The plaintiff is to pay the defendant’s costs of and incidental to this application.

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